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Unpacking the Uncarrier: Why T-Mobile is the way it is
If you’re a John Oliver fan, you might have caught his recent segment on corporate consolidation. It’s too beefy to sum up in an editorial about Android, so I’ve embedded it below. The super TL;DR version is that companies are gobbling up competitors until certain industries are run by only a select few conglomerates. This is typically not good news for consumers because there is less competition and therefore little motivation to improve services or keep prices down. In many industries, we see a select few companies corner the market and consumers suffer.
Then there’s the “Uncarrier”.
In the US, there are basically four major carriers – AT&T, Verizon, T-Mobile, and Sprint. In terms of success, they fall in roughly that order. There are a number of mobile virtual network operators, or MVNOs, out there that can compete, but most of them are owned by one of the big four companies. This is exactly what Oliver is talking about – a few companies owning and controlling the majority of a given service.
T-Mobile may be single-handedly responsible for many of the benefits we see as US smartphone consumers today.
In the past years, T-Mobile has gone out of its way to challenge the status quo. It’s driving down prices and incentivizing the other corporations to be more consumer-friendly. From adding perks like free Netflix (and controversially side-stepping net neutrality), T-Mobile is promoting a very attractive product compared to AT&T and Verizon. But this is the opposite of what Oliver was referring to. There’s apparently no collusion here, which is exactly the point. So what gives?
The fact is that T-Mobile is in a very distant third place behind the two giants. T-Mobile CEO John Legere’s agenda is fixated completely on separating the company from the Big Guys by making it the “Uncarrier”. The benefits to the consumer are obvious: financing phones as a separate cost, dropping contracts, unlimited data plans, and more all came from T-Mobile first. AT&T and Verizon have been forced to keep up with the guy in third place.
It’s worth noting that T-Mobile is in the unique position of being a subsidiary of an overseas carrier. Deutsche Telekom is a successful carrier in Europe, where the market works differently. In many ways T-Mobile is just employing the practices of its European parent in the United States.
Sorry, it’s not about you
But let’s not kid ourselves here. John Legere and T-Mobile might genuine care about customers, but their primary motivation is still very corporate. Like any other company, the Uncarrier wants to make more money. And it’s working.
T-Mobile is the third largest carrier in the market currently, having beaten Sprint for third place in August 2015. Its against-the-grain tactics are making a huge splash in the industry, and the company is experiencing pretty rapid growth.
That said, T-Mobile has a long way to go before it catches up with the likes of AT&T and Verizon.
T-Mobile isn’t really doing anything all that crazy, except perhaps calling other carriers out on their BS
In the meantime, it’s the consumers who benefit. It’s not great that there are only four major players in the mobile carrier space. But with one of them constantly rocking the boat, it has to be frustrating for AT&T and Verizon.
And it has to be downright infuriating to be Sprint, who’ve watched their primary competition sprint past them in the rankings. Recent rumors have even suggested that Sprint might be joining the Mighty Magenta sometime in the near future. If that’s not an indication of T-Mobile success, I don’t know what is. Sadly though, it plays right into the hands of corporate consolidation – with no one nipping at its heels, might T-Mobile get lazy?
Can you hear me now?
It’s not all wine and roses at T-Mobile though. Looking at the magenta maps, there are noticeable gaps in coverage. Even today, T-Mobile doesn’t cover as much territory in the US as AT&T or Verizon, making it a literal “Uncarrier” in some parts, particularly in the western United States. On top of that, the company’s claim of having the fastest LTE connection has recently been called into question by market watchdog the National Advertising Division, as well as T-Mobile’s competitors.
Net neutrality advocates bemoan the fact that T-Mobile is threatening net neutrality by arbitrarily deciding that certain services should not count towards data plans. This might seem a consumer-friendly move (who doesn’t like unlimited Spotify, Netflix, or Whatsapp?), but critics argue that long term, it will give carriers — and the services they favor — undue power.
Plus, the company is under constant scrutiny for… let’s call them… questionable sales practices. T-Mobile employees and customers alike have complained a lot about the sales environment. Despite that, T-Mobile is rated number one in customer satisfaction. Go figure.
In terms of its Uncarrier philosophy, T-Mobile isn’t really doing anything all that crazy. It’s really just calling other carriers out on their BS while offering a “sane” service akin to what Europeans get with Deutsche Telekom. T-Mobile’s biggest curve-ball then, is simply operating as a carrier in a more competitive market would. Across the pond, it’s not uncommon to buy phones at full price, or to have unlimited data. It’s only recently that the US caught up to this and it’s largely because of T-Mobile.
When all is said and done, I’m a fan of what T-Mobile is doing. Its latest “free Netflix” initiative might even be enough to get me to switch to T-Mobile myself (I’m currently an AT&T subscriber). I am still very much on the fence, but from a distance, I enjoy watching T-Mobile make its Uncarrier moves. It’s delightful.
The US carriers may be stuck in an oligopoly, but one of those kids doesn’t like to play by the rules. Let’s just hope it stays that way.